Description of systemic features

Features presented at the end of each application to pilots are the result of a deconstruction of the Bitcoin blockchain technology in order to scale bottom up cooperation for the social good.

The existing dynamics observed in pilots show that it is possible to ignite virtuous economic behaviour when users share the same set of values and agree upon the same set of rules for managing their economic relations of trust with a social currency created out of those very interactions: B2B endorsements in Spain or citizen engagement social credits in Iceland are bottom up examples of decentralized collective engagement in monetary policymaking.

With regard to the pilots (See Annex 1), it must be noted that the necessity expressed varies the most between these two cases:

In case of Eurocat in Spain the need to withdraw endorsements is expressed clearly, but that collides with the inherent features of blockchain-based credits, which mostly consist of

“digital assets” that cannot be controlled by a central authority. In such a case it is recommendable that decentralized technologies and architectures are deployed for the resilience of the data storage (both of transactions and individual wallets), but the Eurocat system itself appears to be designed to be best operated in a centralized fashion, based on a central database.

In the case of Iceland there is demand for sustainable innovation of the sort of complementary currency that can be gained through Social Proof-of-Work (socially relevant activities recognized by the community) and then spent independently on relevant services as for instance public transportation, across already digitized infrastructures that could be made compatible with the circulation of blockchain based credits. In such a scenario is easier to envision and deploy a decentralized credit system that is in fact fitting the needs expressed with the basic features offered by the Freecoin Toolchain, and more in general blockchain technologies.

Such a substantial difference between the two pilots leads us to establish priorities and choose as a primary pilot Iceland, where the need for a decentralized system of credits like the blockchain is clear expressed and can be deployed in cooperation with the municipality of Reykjavik. This pilot can be also more easily linked to the overall DCENT platform, since the Icelandic case can be easily replicated in the context of other network democratic experiments we are running in Spain and Finland as part of Pilot 1.

As concerns the Social Proof-of-Work, the algorithm dedicated to currency creation has to be informed to a significant extent by real world engagement dynamics of community members in the respective contexts and with a transparent architecture. In this way, the consensus algorithm for the Freecoin Toolchain should be instructions coming from the social context through democratic users engagement, rather than a priori digitally encoded instructions.

Together with the development and documentation of the Freecoin Toolchain for ad-hoc blockchain development, the link between Social POW based on democratic decision-making and the effective creation of digital coins is probably the biggest challenge ahead for this research. There are two approaches we envision:

1) Creating a new blockchain and adapt its features so that there is a useful and finite amount of pre-mined coins in the hands of the community and that any mining following it is not creating more of them, rather than contribute to the circulation of transactions. In this way, the incentives to gain are not applied to mining (which may be operated by collectively owned mining infrastructure) but to actions whose values are recognized by the Social POW democratic decision process. This is potentially more effective and leading to immediate results to be tested on the ground during our user research and pilots.

2), Creating a sidechain supporting a more advanced scripting setup to link directly the Social POW decision making process to the algorithmic creation of credits, in fact eliminating the human intermediation for the distribution of credits and making them appear in people’s wallets, as if Social POW would trigger mining results. This solution is more advanced and experimental, not necessarily leading to immediately deployable results.

The first approach resembles the solution adopted by Faircoin in pre-mining a fixed amount of coins. Changing the software (Bitcoin 0.8 in this case) to reward down to 0.001 for mining basically meant to support the network and not to distribute coins. The advantage of this solution is clear when we consider that it adopts Bitcoin Core as the starting point and, while developing yet another alt-coin informed by this research, it can keep in sync with the most reliable (and de-facto reference) software implementation for blockchains, as well inherit its compatibility with a vast range of tools built for it.

The second approach recalls the efforts made in projects aiming to implement blockchain scripts and “smart contracts” and more advanced features which we possibly see as useful in future, but as of today are too premature and unstable to be adopted within the span of this research project and produce any tangible result that can be effectively deployed in real world large scale pilots.

There are two main systemic features we intend to apply to existing and new systems adopted by pilots and they represent a clear innovation, beyond previous implementations of complementary currencies.

1) decentralized and resilient storage of data commons, relying on the possibility to establish a relationship of shared stewardship among participants.

2) ubiquitous wallets meaning that assets owned by each participants will be stored on the blockchain whenever possible, granting decentralized access to it via a secret and without being bound to any physical device, in fact envisioning the possibility for public points of access.

The latter in particular is a basic ingredients of the Freecoin Toolchain which will further experiment on the parameters that influence the nature of currency, economic or financial systems that a community wants to design and use for decentralized circulation of value backed by the very community's trust patterns. As the application to pilots showed, by playing with this parameters it is possible to define a pattern language for the design and implementation of open-source and tailor-made decentralized trust management - viz. social currency - systems.

These are the implementation elements we see as a Minimum Viable Product for the implementation phase (D5.5) and the integration (D5.6) to follow. Such an MVP will be deployed as much as possible in cooperation with pilots, still considering its highly experimental nature.

We believe that blockchains were invented specifically for the Bitcoin project but they can be applied anywhere a distributed consensus needs to be established in the presence of malicious or untrustworthy actors. This is the case of the pilots and uses-cases presented in D3.4: D-CENT pilot communities have the need to reach distributed consensus on their respective issues, being them about either trust management for regulating monetary policy of a regional currency system (Spain) or the exchange of social credits and their spendability (Iceland), etc. Notwithstanding, a desirable implementation of a decentralized and transparent digital social currency might be potentially extended to the financial services industry and national public economies.

Figure 6: freicoin overview